S.27 Trustee Act 1925


I’d be grateful for some thoughts on the following:

A valid will failed in its disposition because the sole beneficiary had pre-deceased, leaving the entire residuary estate intestate.

The overseas executor provided a general Power of Attorney for a solicitor to act as Personal Representative. The high value estate was distributed to paternal and maternal cousins or their issue, there being no closer degree of relative.

One maternal uncle was thought to have died early in WW1, unmarried and without issue, according to information provided by the maternal family. However, this was never corroborated or fact checked by the executor.

In actual fact, the uncle died late in WW1 and had married, with one child, who in turn left issue. Several years after the distribution (but within the relevant limitation period) the overlooked issue of this stem are now claiming their entitlement (a large six figure amount).

As the solicitor placed a notice in the London Gazette in accordance with s.27 of the Trustee Act 1925, they and their firm are claiming as a defence that the notice accords them full protection from claims from unknown relatives.

In addition, with the passage of time, the relatives who did receive monies will have a strong ‘change of position’ defence to any claim brought against them and none of them would be willing to join the PR via a Part 20 claim.

In over 40 years of probate research and assisting with probate administration, and like many practitioners with whom we have spoken, we have always regarded the general and usual purpose of s.27 notices as being mainly to alert any remaining creditors to an imminent distribution.

The prevailing view appears to be that times have moved on and that there are now more appropriate ways of protecting against possible future claims, such a missing beneficiary indemnity insurance, which is cost effective and easily obtainable.

However, a careful reading of s.27 does appear to afford the protection that the PR says applies in this particular case.

If this is still the case, it effectively allows PRs to ignore the possibility of unknown beneficiaries and to not undertake or arrange for any research at all. In fact, it discourages any such investigation, so that unknown relatives, if there are any, remain unknown.

I wonder whether forum members have any experience and/or opinion on this defence?”

Philip Turvey
Anglia Research

The whole point of s27 is that it exists to provide protection to the trustee(s)/PRs enabling them to distribute earlier than would otherwise be the case eg without awaiting expiry of any limitation period, without barring any later claim by anyone entitled [whether as a beneficiary, creditor or otherwise] who could still pursue those holding assets derived from the estate.

For the trustees/PRs to rely on the benefit of this protection they must show that they have complied with the requirements of the section, which goes further than one notice in the London Gazette, and in particular may require multiple notices. If so, as I learnt as an articled clerk 40+ years ago, the claim date must be the same in all notices [being at least 2 months after the latest “advertisement”/notice] something which I have often seen breached over the years. Furthermore, proper consideration should be given to the placement of notices - ideally likely to come to the notice of those potentially affected. For example, if a house/land is involved the section refers to "a newspaper circulating in the district " which may be the source of the common view that one should always advertise in the Gazette and a local paper - but why not a suitable national? A press agency told me [again c. 1975] that the cheapest “court acceptable” paper was the Morning Star [then the official communist party paper], followed by the Daily Telegraph [the Sun being most expensive - I suppose I should stress that other papers are/were available].

I must disagree with Philip’s view that this in any way discourages PRs from carrying out suitable research into possible beneficiaries - and wonder if his preferred “missing beneficiary indemnity” is not in reality a protection for the genealogist instructed (and paid for) by the estate, rather than for the PRs/the estate …

Kevin Mullen

I would ask whether the personal representative was acting in accordance with their duty of care in administering the estate, when they relied upon family reports of the relative’s demise, rather than obtaining a death certificate?

If they were not, I do not see how they can then rely on section 27?

Surely the purpose of section 27 is to protect against unknown creditors/beneficiaries, rather than uncertain creditors/beneficiaries, when a duty of reasonable investigation (for want of a better description) must surely then arise to enable them to identify all beneficiaries and act in the best interests of them all?

Kind regards

Jane Huntley
Chadwick’s, Leyland

When I was at University (1966-69) I learned inter alia how to free a slave (mancipatio) during 2 wasted years of Roman law. I also learned about feoffing in fields (legal history). Section 27 is one of those delicious antiquated procedures comparable to a clinically unnecessary colonoscopy. A modern equivalent is AML KYC for clients you have known personally for over 30 years. Isn’t practice of the law grand!

Jack Harper

I am sorry to disagree, Peter but, in my experience, missing beneficiary indemnity insurance is not easy to obtain. On the contrary, the insurer will generally require meticulous evidence of the most extensive searches. Only if there is virtually no possibility
of a beneficiary cropping up will they deign to accept your premium!

D Holliday

The flaw in the PR’s defence is that the uncle was not an ‘unknown’ relative, the PR knew of his existence but wrongly assumed his death without issue.

Wendy Machon
Sprake & Kingsley LLP

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For the right premium insurers will cover you against any eventuality-------except risk

Jack Harper

An executor is expected to take all reasonable steps to locate beneficiaries. You rely on anecdotal family evidence at your own risk.

Nigel George
Garner & Hancock

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Hi Damon,

Through our recommended insurers, we arrange hundreds of MBI insurance policies every year. Of course, the insurers require meticulous research to have been undertaken, but once any risks, both known and unknown, have been determined, a policy is issued almost immediately with the premium being a fair reflection of the insurer’s risk.

However, this strays away from the s.27 conundrum in my original posting, which posed the question ‘is s.27 really the get-out-of-jail free’ card for which it is being used? Jane makes an interesting point about the level of certainty required, and genuinely unknown as opposed to uncertain. Also, in this case, it might be argued that the maternal relatives who provided the information had a vested interest in the result?

Philip Turvey
Anglia Research